Many companies and organizations are continuing to look for ways to reduce their internal cost of operations and overhead. Implementing LEAN manufacturing principles has become a very important concept and one that may help improve overall efficiency of operations, directly impacting bottom line results. This blog is written for those organizations.

June 2010

06/28/2010

There are many wastes that can occur in a manufacturing process. Re-work, in-efficient movement and production down time are just a few of the obvious waste. But, do you know what the eight most common waste are and how does it impact value added and non-value added activities.

Before we can even talk about waste, we need to define what is value added versus non-value added processes in a manufacturing environment. Value added is any activity that changes the fit, form, or function of a product. This typically is a modification to a products performance that enhances its efficiency. An example of this would be increased fuel economy due to an engine redesign. The key to value added is that the customer must be willing to pay for these activities.

So, what is non-value added? Non-value added is any activity that does not change the fit, form, or function. The customer is typically not willing to pay for these. These are the costs that must become the focus to be reduced or eliminated.

The key to a LEAN manufacturing environment is to eliminate these eight wastes. The eight wastes are non-value added activities. By eliminating these eight wastes you will increase your value added abilities which will ultimately increase profitability. If you can manage these wastes it will improve your earnings potential and improve cashflow.

The acronym for the eight wastes is DOWNTIME. Downtime stands for:

Defects

Overproduction

Waiting

Non-value added processing

Transportation

Inventory excess

Motion waste

Employee/people waste

1. Defects

Defects are usually due to inspection and rework of defective material in inventory. Some causes of defects are:

Weak process capability

Poor quality controls

Uncontrolled inventory levels

Poor process documentation

Misunderstood customer needs

Design changes

Poor machine capability

2. Overproduction

Overproduction is making more than is required by the customer, making earlier than is required by the customer and making product the customer does not want. This is a major flaw that occurs unknowingly with most manufacturers. This waste can tie up significant working capital resources that can be used for other business operations. Some key causes of overproduction are: